πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!

  • google app store apple app store
  • βœ–

      Question

      If a firm has 100 in inventories, a current ratio equal

      to 1.2, and a quick ratio equal to 1.1, what is the firm's Net Working Capital?
      B 100 Correct Answer Incorrect Answer
      C 200 Correct Answer Incorrect Answer
      D 1200 Correct Answer Incorrect Answer
      E 1000 Correct Answer Incorrect Answer

      Solution

      Current Ratio = CA/CL=1.2 CA= 1.2CL -------(1) Quick Ratio = (CA-100)/CL=1.1 Equating (1) in quick ratio will give: 1.2 CL-100 / CL = 1.1 CL = 1000 So, CA will be 1.2 CL i.e., 1.2 * 1000 = 1200 WC = CA-CL 1200-1000 = 200

      Practice Next
      ask-question